How Long Until a Rally?
Market may have to wait until 2009.
As hedge fund redemptions pile up, there is every sort of debt instrument for sale, particularly hybrids (fixed to floating preferreds) and preferred shares. What are the pro traders saying about your stocks?
There are a bunch of funds that used the securities as a funding vehicle. Now they are funding out what happens to perpetual securities when spreads blow out.
The real problem, though, is that selling begets selling. Individuals, jammed full of this stuff, will panic and sell for a tax loss.
Meanwhile it isn't terribly economic for firms to issue at 15%, which is the popular level for the weak regionals.
Then there are four more problems:
1. Quarter end balance sheet pressures on 9/30.
2. Mutual fund fiscal year ends 10/31.
3. Brokerage firms fiscal year 11/30.
4. Year end 12/31.
I don't see this market rallying until we get past these dates and it will make it awfully tough on those that need capital, which is nearly everyone.
Minyanville's Buzz & Banter- 14 day FREE Trial
What are the pro traders saying about your stocks?
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter